Item 4LM E M O R A N D U M
February 27, 2018
To: Shana Yelverton, City Manager
From: Sharen Jackson, Chief Financial Officer
Subject: Approve Ordinance No. 1188, 1st Reading, Adoption of New
RRM Tariff for Atmos Mid-Tex Division.
Action
Requested: Approval of Ordinance 1188
Background
Information: The purpose of this item is to seek City Council approval of
the new RRM Tariff for Atmos Mid-Tex Division (“Atmos”).
March 1, 2017, Atmos filed an application seeking a rate
increase. The City, along with over 150 other cities
served by Atmos, is a member of the Atmos Cities
Steering Committee (“ACSC”). This group of cities
worked on a settlement agreement with Atmos regarding
the rate increases.
On June 2, 2017, City Council approved Ordinance
1172 the negotiated settlement agreement between the
ACSC Executive Committee and Atmos to resolve
issues identified during the review and evaluation of
Atmos’ 2017 rate increase application.
Ordinance 1172 that resolved Atmos’ rate request also
terminated existing Rate Review Mechanism (“RRM”)
Tariff and required a renegotiation of the terms of that
Tariff.
Negotiations have taken place over the past several
months, and have resulted in a revised RRM Tariff that
has been agreed by the Atmos. The ACSC Executive
Committee has recommended acceptance of the revised
RRM Tariff.
o The proposed New RRM Tariff:
Reduces Atmos allowed rate of return on equity
from 10.50% to 9.8%;
Page 2 of 2
Captures the reduction in federal income tax
rates from 35% to 21% and should result in a
rate reduction effective by mid-March 2018;
Expands the time cities have to review future
rate filings to five months (previous Tariff only
allowed three months)
The ACSC Executive Committee and ACSC legal counsel
recommend that all cities adopt the ordinance approving the
New RRM Tariff.
Financial
Considerations: None
Strategic Link: B2: Collaborate with select partners to implement service
solutions
Citizen Input/
Board Review: None required
Legal Review: Lloyd Gosselink Rochelle & Townsend, P.C. prepared the
ordinance.
Alternatives: Deny the ordinance which would result in another contested
case hearing.
Supporting
Documents: Ordinance 1188
New Tariffs (Attachment A)
Staff
Recommendation: Approval of Ordinance 1188
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ORDINANCE NO. 1188
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SOUTHLAKE, TEXAS, APPROVING A TARIFF AUTHORIZING
AN ANNUAL RATE REVIEW MECHANISM (“RRM”) AS A
SUBSTITUTION FOR THE ANNUAL INTERIM RATE
ADJUSTMENT PROCESS DEFINED BY SECTION 104.301 OF
THE TEXAS UTILITIES CODE, AND AS NEGOTIATED
BETWEEN ATMOS ENERGY CORP., MID-TEX DIVISION
(“ATMOS MID-TEX” OR “COMPANY”) AND THE STEERING
COMMITTEE OF CITIES SERVED BY ATMOS; REQUIRING
THE COMPANY TO REIMBURSE CITIES’ REASONABLE
RATEMAKING EXPENSES; ADOPTING A SAVINGS CLAUSE;
DETERMINING THAT THIS ORDINANCE WAS PASSED IN
ACCORDANCE WITH THE REQUIREMENTS OF THE OPEN
MEETINGS ACT; DECLARING AN EFFECTIVE DATE; AND
REQUIRING DELIVERY OF THIS ORDINANCE TO THE
COMPANY AND LEGAL COUNSEL FOR THE STEERING
COMMITTEE.
WHEREAS, the City of Southlake, Texas (“City”) is a gas utility customer of Atmos
Energy Corp., Mid-Tex Division (“Atmos Mid-Tex” or “Company”), and a regulatory authority
with an interest in the rates and charges of Atmos Mid-Tex; and
WHEREAS, the City and similarly-situated Mid-Tex municipalities created the Steering
Committee of Cities Served by Atmos to efficiently address all rate and service matters
associated with delivery of natural gas; and
WHEREAS, the Steering Committee formed an Executive Committee to direct legal
counsel and to recommend certain specific actions to all aligned Mid-Tex Cities through
resolution or ordinance; and
WHEREAS, pursuant to the terms of a November 2007 agreement between the Steering
Committee and Atmos Mid-Tex that settled the Company’s interim rate filing under Section
104.301 of the Texas Utilities Code (a “GRIP” rate case), the Steering Committee and the
Company collaboratively developed a Rate Review Mechanism (“RRM”) Tariff, ultimately
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authorized by the City in 2008, that allows for an expedited rate review process as a substitute
for the GRIP process; and
WHEREAS, the City has kept some form of a RRM Tariff in place until 2017 when it
adopted an ordinance approving an RRM Tariff filing settlement and specifically calling for
termination of the existing RRM Tariff and negotiation of a replacement RRM Tariff following
the Railroad Commission’s decision in a then-pending Atmos Texas Pipeline case (GUD No.
10580); and
WHEREAS, the Steering Committee’s Executive Committee has recently approved a
settlement with the Company on the attached RRM Tariff that contains certain notable
improvements, from a consumer perspective, over the prior RRM Tariff, including a reduced rate
of return on equity, acceptance of certain expense adjustments made by the Railroad
Commission in the Order in GUD No. 10580, and the addition of two months to the time for
processing a RRM Tariff application; and
WHEREAS, the RRM Tariff contemplates reimbursement of Cities’ reasonable expenses
associated with RRM Tariff applications; and
WHEREAS, the Steering Committee’s Executive Committee recommends that all
Steering Committee member cities adopt this ordinance and the attached RRM Tariff; and
WHEREAS, the attached RRM Tariff is just, reasonable and in the public interest,
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF SOUTHLAKE, TEXAS:
Section 1. That the findings set forth in this Ordinance are hereby in all things approved.
Section 2. That the attached RRM Tariff re-establishing a form of Rate Review
Mechanism is just and reasonable and in the public interest, and is hereby adopted.
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Section 3. That Atmos Mid-Tex shall reimburse the Cities’ reasonable expenses
associated with adoption of this Ordinance and the attached RRM Tariff and in processing future
RRM Tariff applications filed pursuant to the attached tariff.
Section 4. That to the extent any resolution or ordinance previously adopted by the City
is inconsistent with this Ordinance, it is hereby repealed.
Section 5. That the meeting at which this Ordinance was approved was in all things
conducted in strict compliance with the Texas Open Meetings Act, Texas Government Code,
Chapter 551.
Section 6. That if any one or more sections or clauses of this Ordinance is adjudged to
be unconstitutional or invalid, such judgment shall not affect, impair or invalidate the remaining
provisions of this Ordinance , and the remaining provisions of this Ordinance shall be interpreted
as if the offending section or clause never existed.
Section 7. That this Ordinance shall become effective from and after its passage.
Section 8. That a copy of this Ordinance shall be sent to Atmos Mid-Tex, care of Chris
Felan, Vice President of Rates and Regulatory Affairs, Atmos Energy Corporation, Mid-Tex
Division, 5420 LBJ Freeway, Suite 1862, Dallas, Texas 75240, and to Geoffrey Gay, General
Counsel to Mid-Tex Cities, at Lloyd Gosselink Rochelle & Townsend, P.C., 816 Congress
Avenue, Suite 1900, Austin, Texas 78701.
PASSED AND APPROVED this day of , 2018.
Mayor
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ATTEST: APPROVED AS TO FORM:
City Secretary City Attorney
ATMOS ENERGY CORPORATION
MID-TEX DIVISION
RATE SCHEDULE: RRM – Rate Review Mechanism
APPLICABLE TO: ALL CITIES IN THE MID-TEX DIVISION AS IDENTIFIED IN EXHIBIT A TO
THIS RATE SCHEDULE
EFFECTIVE DATE:Bills Rendered on and after 04/01/2018 PAGE: 7
Exhibit A
ACSC Cities
Abilene Cleburne Frost Lincoln Park
Addison Clyde Gainesville Little Elm
Albany College Station Garland Lorena
Allen Colleyville Garrett Madisonville
Alvarado Colorado City Grand Prairie Malakoff
Angus Comanche Grapevine Mansfield
Anna Commerce Groesbeck Mckinney
Argyle Coolidge Gunter Melissa
Arlington Coppell Haltom City Mesquite
Aubrey Copperas Cove Harker Heights Midlothian
Azle Corinth Haskell Murphy
Bedford Crandall Haslet Newark
Bellmead Crowley Hewitt Nocona
Benbrook Dalworthington Gardens Highland Park North Richland Hills
Beverly Hills Denison Highland Village Northlake
Blossom Denton Honey Grove Oak Leaf
Blue Ridge Desoto Hurst Ovilla
Bowie Draper Hutto Palestine
Boyd Duncanville Iowa Park Pantego
Bridgeport Eastland Irving Paris
Brownwood Edgecliff Village Justin Parker
Buffalo Emory Kaufman Pecan Hill
Burkburnett Ennis Keene Petrolia
Burleson Euless Keller Plano
Caddo Mills Everman Kemp Ponder
Canton Fairview Kennedale Pottsboro
Carrollton Farmers Branch Kerens Prosper
Cedar Hill Farmersville Kerrville Quitman
Celeste Fate Killeen Red Oak
Celina Flower Mound Krum Reno (Parker County)
Centerville Forest Hill Lake Worth Rhome
Cisco Forney Lakeside Richardson
Clarksville Fort Worth Lancaster Richland
Frisco Lewisville Richland Hills
ATMOS ENERGY CORPORATION
MID-TEX DIVISION
RATE SCHEDULE: RRM – Rate Review Mechanism
APPLICABLE TO: ALL CITIES IN THE MID-TEX DIVISION AS IDENTIFIED IN EXHIBIT A TO
THIS RATE SCHEDULE
EFFECTIVE DATE:Bills Rendered on and after 04/01/2018 PAGE: 8
River Oaks Temple
Roanoke Terrell
Robinson The Colony
Rockwall Trophy Club
Roscoe Tyler
Rowlett University Park
Royse City Venus
Sachse Vernon
Saginaw Waco
Sansom Park Watauga
Seagoville Waxahachie
Sherman Westlake
Snyder Westover Hills
Southlake Westworth Village
Springtown White Settlement
Stamford Whitesboro
Stephenville Wichita Falls
Sulphur Springs Woodway
Sweetwater Wylie